first quarter earnings presentation · first quarter 2018 financial summary 4 ($ in millions unless...

First QuarterEarnings Presentation

May 4, 2018

Safe Harbor Statement and Other Matters

2

This presentation contains forward-looking statements, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical or current fact. The words "believe," "expect," “will,” "anticipate," "plan," "estimate," "target," "project" and similar expressions, among others, generally identify "forward-looking statements," which speak only as of the date such statements were made. These forward-looking statements may address, among other things, the outcome or resolution of any pending or future environmental liabilities, the commencement, outcome or resolution of any regulatory inquiry, investigation or proceeding, the initiation, outcome or settlement of any litigation, changes in environmental regulations in the U.S. or other jurisdictions that affect demand for or adoption of our products, anticipated future operating and financial performance, business plans and prospects, capital investments and projects, plans for dividends or share repurchases, sufficiency or longevity of intellectual property protection, cost savings targets, plans to increase profitability and growth, our ability to make acquisitions, integrate acquired businesses or assets into our operations, and achieve anticipated synergies or cost savings, and our outlook for net sales, Adjusted EBITDA, Adjusted EPS, Free Cash Flow and Return on Invested Capital (ROIC), all of which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized. These statements are not guarantees of future performance. Forward-looking statements also involve risks and uncertainties that are beyond Chemours' control. Additionally, there may be other risks and uncertainties that Chemours is unable to identify at this time or that Chemours does not currently expect to have a material impact on its business. Factors that could cause or contribute to these differences include the risks, uncertainties and other factors discussed in our filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2017. Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law.

We prepare our financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”). Within this presentation we may make reference to Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Pre-tax Operating Income, Free Cash Flow, Return on Invested Capital (ROIC) and Net Leverage Ratio which are non-GAAP financial measures. The company includes these non-GAAP financial measures because management believes they are useful to investors in that they provide for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Further information with respect to and reconciliations of such measures to the nearest GAAP measure can be found in the appendix hereto.

Management uses Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Pre-tax Operating Income, Free Cash Flow, ROIC and Net Leverage Ratio to evaluate the company’s performance excluding the impact of certain noncash charges and other special items which we expect to be infrequent in occurrence in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.

Additional information for investors is available on the company’s website at investors.chemours.com.

Highlights

3

Doubled earnings per share on strong Adjusted EBITDA growth

Acquired ICOR International, an attractive, targeted addition to the Chemours refrigerants platform

Repurchased approximately $400 million of shares through April 2018

Expect to exceed 3-year financial targets, driven by momentum from anticipated 2018 performance

First Quarter 2018 Financial Summary

4

($ in millions unless otherwise noted)

1Q18 1Q17∆

Yr/Yr

Net Sales $1,730 $1,437 293

Net Income1 297 150 147

Adj. Net Income 266 131 135

EPS2 $1.58 $0.79 $0.79

Adj. EPS2 $1.41 $0.70 $0.71

Adj. EBITDA 468 285 183

Adj. EBITDA Margin (%) 3 27 20 7

Free Cash Flow4 94 (28) 122

Pre-Tax ROIC (%)5 40 21 19

Year-Over-Year

Strong financial performance

driven by contributions from all

three businesses

Doubled EPS on Adjusted

EBITDA margin improvement of

approximately 700 basis points

Significant Free Cash Flow

despite seasonal working capital

use and elevated capital

expenditures

Pre-tax ROIC expansion to 40%

1 Net Income attributable to Chemours2 Calculation based on diluted share count3 Defined as Adjusted EBITDA divided by Net Sales4 Defined as Cash from Operations minus cash used for PP&E purchases5 Defined as Adjusted EBITDA on a trailing twelve-month basis less depreciation & amortization divided by average invested capital over the last five quarters

See reconciliation of Non-GAAP measures in the Appendix

Adjusted EBITDA Bridge: 1Q18 versus 1Q17

5See reconciliation of Non-GAAP measures in the Appendix

$285

$468

$47

$140

$47

$43

0

100

200

300

400

500

1Q17 Local Price Volume Currency Cost/Other 1Q18

Positive Impact

Negative Impact• Ti-Pure™ global average price up 22%

• Contractual pricing adjustments for

mobile Opteon™ products offset by

higher base refrigerant and

Fluoropolymers pricing

• Continued adoption of

Opteon™ refrigerants

• Increased demand for

fluoropolymer products and

Ti-Pure™ titanium dioxide

• Higher raw material

and distribution costs

• Water treatment costs


Adjusted EPS Bridge: 1Q18 versus 1Q17

6See reconciliation of Non-GAAP measures in the Appendix

$0.70

$1.41

$0.26

$0.97

$0.00

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1Q17 Pre-Tax Mix Shares 1Q18

Positive Impact

Negative Impact

($ per share unless otherwise noted)

Adjusted

Operating Income

Change in Effective

Tax Rate

Change in

Diluted Shares1

1 Based on average shares outstanding in 1Q18

• Geographic mix of earnings

• Discrete tax items

Liquidity Position

7

$1,556

$1,434

$192

$102 $31

$185

$297

$73

$18

4Q17Cash

Balance

1Q18Net

Income*

Depr.,Amort.

Impairment

DeferredTax &Other

WorkingCapital

CAPEX Dividend Other 1Q18Cash

Balance

Negative Impact

Positive Impact

Operating Cash Flow $196M

March 31, 2018 ending cash

of $1.4B

Free Cash Flow of $94M1

versus ($28M) in 1Q17

Capital expenditures of $102M

Completed $400M of share

repurchases since inception,

including $240M in 1Q18

Total Liquidity of ~$2.2B,

including revolver availability of

$800M2

Net debt of $2.7B, net leverage

ratio3 of ~1.7 times on a trailing

twelve month basis

Amended and restated Credit

Agreement in April 2018

1 Includes cash restructuring payments of $13M in 1Q182 Based on new revolving credit facility. Chemours had $106M in letters of credit outstanding as of March 31, 20183 Senior Secured Net Debt/EBITDA is 0.4 based on Credit Agreement definition4 Reflects cash used for share repurchases and proceeds from the sales of property

* Net Income attributable to Chemours

4



8

Fluoroproducts Business Summary

Financial Summary ($ in millions)

Adoption of Opteon™ stationary blends in Europe and

mobile refrigerants in US drove strong year-over-year

volume increase

Higher price for base refrigerants due to tightening

regulations and global supply constraints

Broad-based Fluoropolymers demand growth and

improved price across most product lines

Anticipate continued transition to Opteon™ stationary

blends in Europe and mobile refrigerants in US

Expect sales of base refrigerants to benefit from

improved price with flat volume

Anticipate Fluoropolymers demand slightly above GDP

Planned maintenance at Fluoropolymer facilities in

second and third quarters


2018 Outlook CommentaryFirst Quarter Highlights

$652

$732

1Q17 1Q18

Net Sales

$155

$206

24%28%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0

50

100

150

200

1Q17 1Q18

Adjusted EBITDA

Adjusted EBITDA Margin

Yr/Yr

% ∆

Price 0

Currency 4

Volume 8

Sales Drivers

9

Chemical Solutions Business Summary


Solid demand and positive raw material pass-through

pricing for Mining Solutions products

Slightly positive demand with modestly lower prices in

Performance Chemicals & Intermediates product lines

Lower technology licensing income during the quarter

in comparison to 4Q17 and 1Q17

Experiencing a delay in the construction of the new

Mining Solutions facility

Mining Solutions products expected to remain sold-

out throughout year

Anticipate favorable market conditions across

Chemical Solutions businesses


First Quarter Highlights

$139

$144

1Q17 1Q18

Net Sales

$12$11

9%8%

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

0

2

4

6

8

10

12

14

1Q17 1Q18

Adjusted EBITDA


Yr/Yr

% ∆

Price 0

Currency 1

Volume 3

Sales Drivers

2018 Outlook Commentary

10

Titanium Technologies Business Summary


Year-over-year higher global average price reflected

implementation of previously-communicated

increases in 2017

Communicated price increases to specific customers

in North America and Asia Pacific, effective April 1st

Robust year-over-year growth in key market

segments

Expect volume for Ti-Pure™ pigment to be modestly

above GDP

Working with customers to implement previously-

communicated price increases while supporting their

growing needs

Anticipate global circuit to be highly utilized

throughout 2018


First Quarter Highlights

$646

$854

400

450

500

550

600

650

700

750

800

850

900

1Q17 1Q18

Net Sales

$159

$294

25%

34%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0

50

100

150

200

250

300

1Q17 1Q18

Adjusted EBITDA


Yr/Yr

% ∆

Price 22

Currency 5

Volume 5

Sales Drivers

2018 Outlook Commentary

2018 Outlook

Adjusted

EBITDA $1.70 - $1.85 Billion

AdjustedEPS $5.00 - $5.75

1 Subject to risks, uncertainties and assumptions, all of which are described in our public filings and safe harbor statement

2018 Ti-Pure™ realized average price

above 2017 average price

Continued Opteon™ adoption

Fluoropolymers volume growth

Changes to Adjusted EPS include

benefit from ~$400M in completed

share repurchases

Key Factors and Assumptions1


Free Cash Flow > $700 Million

11

Top End Of:

Expect to Meet or Exceed Three-Year Targets

1212

1x – 2x GDP growth rate

15% – 20% CAGR

REVENUE

ADJUSTED

EBITDA MARGINS

ADJUSTED EPS

ROIC

CUMULATIVE FCF

Improvement by ~500 basis points

Maintain above 30%

Generate $2 – $3 billion

CASH RETURN

TO SHAREHOLDERS

~$125 million per year dividend1

$500 million share repurchase

1. Based on $0.17/share, subject to quarterly Board approval


Subject to risks, uncertainties and assumptions, all of which are described in our public filings and safe harbor statement

13

Appendix

Segment Net Sales and Adjusted EBITDA (Unaudited)

14

($ in millions unless otherwise noted) Three months ended

December 31,

2018 2017 2017

SEGMENT NET SALES

Fluoroproducts 732$ 652$ 656$

Chemical Solutions 144 139 134

Titanium Technologies 854 646 785

Total Company 1,730$ 1,437$ 1,575$

SEGMENT ADJUSTED EBITDA

Fluoroproducts 206$ 155$ 159$

Chemical Solutions 11 12 20

Titanium Technologies 294 159 261

Corporate & Other (43) (41) (46)

Total Company 468$ 285$ 394$

SEGMENT ADJUSTED EBITDA MARGIN

Fluoroproducts 28.1% 23.8% 24.2%

Chemical Solutions 7.6% 8.6% 14.9%

Titanium Technologies 34.4% 24.6% 33.2%

Corporate & Other 0.0% 0.0% 0.0%

Total Company 27.1% 19.8% 25.0%

March 31,

Three months ended

GAAP Net Income to Adjusted Net Income and Adjusted

EBITDA Reconciliations (Unaudited)

15

($ in millions except per share amounts)

$ amounts $ per share $ amounts $ per share $ amounts $ per share

Net income attributable to Chemours 297$ 1.58$ 150$ 0.79 228$ 1.19$

Non-operating pension and other post-retirement employee benefit income (7) (0.04) (8) (0.04) (10) (0.05)

Exchange gains — — (5) (0.03) — —

Restructuring, asset-related, and other charges, net 10 0.05 12 0.06 26 0.14

Gain on sale of assets or businesses (1) (42) (0.22) (16) (0.08) (8) (0.04)

Legal and other charges (2) 4 0.02 7 0.04 — —

Adjustments made to income taxes (3,5) (5) (0.03) (10) (0.05) (3) (0.02)

Provision for (benefit from) income taxes relating to reconciling items (4,5) 9 0.05 1 0.01 (4) (0.02)

Adjusted Net Income 266$ 1.41$ 131$ 0.70$ 229$ 1.19$

Net income attributable to non-controlling interests — 1 —

Interest expense, net 52 51 54

Depreciation and amortization 70 71 69

All remaining provision for income taxes (5) 80 31 42

Adjusted EBITDA 468$ 285$ 394$

Weighted-average number of common shares outstanding - basic 182,069,982 183,408,309 185,445,024

Weighted-average number of common shares outstanding - diluted 188,333,197 189,149,930 191,998,959

Earnings per share - basic 1.63$ 0.82$ 1.23$

Earnings per share - diluted (6) 1.58 0.79 1.19

Adjusted earnings per share - basic 1.46 0.72 1.23

Adjusted earnings per share - diluted (6) 1.41 0.70 1.19

(4) The income tax impacts included in this caption are determined using the applicable rates in the tax ing jurisdictions in w hich income or ex pense occurred and include both current and deferred income tax ex pense or benefit based on the nature of the non-GAAP financial measure.

(5) The total prov ision for income tax es reconciles to the amount reported in the consolidated statements of operations for the three months ended March 31, 2018 and 2017 and for the three months ended December 31, 2017.

* Note: Summation of per share columns may not sum due to rounding.

(6) Diluted earnings per share is calculated using net income av ailable to common shareholders div ided by diluted w eighted-av erage common shares outstanding during each period, w hich includes unv ested restricted shares. Diluted earnings per share considers the impact of potentially

dilutiv e securities ex cept in periods in w hich there is a loss because the inclusion of the potential common shares w ould hav e an anti-dilutiv e effect.

2017

Three months endedThree months ended

March 31,

(3) Includes the remov al of certain discrete income tax impacts w ithin the Company ’s prov ision for income tax es. For the three months ended March 31, 2018 and 2017, the adjustment is primarily attributable to w indfall benefits on the Company ’s share-based pay ments of $5 and $10,

respectiv ely . For the three months ended December 31, 2017, the adjustment is primarily attributable to a benefit for the net impact of U.S. tax reform, w hich amounted to $3.

(2) Includes litigation settlements, w ater treatment accruals, and other charges.

2018 2017

December 31,

(1) For the three months ended March 31, 2018, gain on sale includes a $42 gain associated w ith the sale of the Company ’s Linden, New Jersey site. For the three months ended March 31, 2017, gain on sale includes a $12 gain associated w ith the sale of the Company ’s Edge Moor,

Delaw are site and a $4 gain associated w ith the sale of the Company ’s land in Repauno, New Jersey that w as prev iously deferred and realized upon meeting certain milestones. For the three months ended December 31, 2017, gain on sale includes a $9 gain associated w ith the sale of

the Company ’s land in Repauno, New Jersey that w as prev iously deferred and realized upon meeting certain milestones, net of certain losses on other disposals.

GAAP Net Income to Adjusted Pre-Tax Operating Income and

Adjusted Net Income Reconciliations (Unaudited)

16

($ in millions except per share amounts)

$ amounts $ per share $ amounts $ per share

Net income attributable to Chemours 297$ 1.58 150$ 0.79

Provision for income taxes 84 0.45 22 0.12

Non-operating pension and other post-retirement employee benefit income (7) (0.04) (8) (0.04)

Exchange gains — — (5) —

Restructuring, asset-related, and other charges, net 10 0.05 12 0.06

Gain on sale of assets or businesses (1) (42) (0.22) (16) (0.08)

Legal and other charges (2) 4 0.02 7 0.04

Adjusted Pre-tax Operating Income 346 1.84 162 0.86

Provision for income taxes (84) (0.45) (22) (0.12)

Adjustments made to income taxes (3) (5) (0.03) (10) (0.05)

Provision for income taxes related to reconciling items (4) 9 0.05 1 0.01

Adjusted Net Income 266$ 1.41$ 131$ 0.70$

Weighted-average number of common shares outstanding - basic 182,069,982 183,408,309

Weighted-average number of common shares outstanding - diluted 188,333,197 189,149,930

Earnings per share - basic 1.63$ 0.82$

Earnings per share - diluted (5) 1.58 0.79

Adjusted earnings per share - basic 1.46 0.72

Adjusted earnings per share - diluted (5) 1.41 0.70

(4) The income tax impacts included in this caption are determined using the applicable rates in the tax ing jurisdictions in w hich income or ex pense occurred and include both current and deferred income tax

ex pense or benefit based on the nature of the non-GAAP financial measure.

(5) Diluted earnings per share is calculated using net income av ailable to common shareholders div ided by diluted w eighted-av erage common shares outstanding during each period, w hich includes unv ested

restricted shares. Diluted earnings per share considers the impact of potentially dilutiv e securities ex cept in periods in w hich there is a loss because the inclusion of the potential common shares w ould hav e an

anti-dilutiv e effect.

* Note: Summation of per share columns may not sum due to rounding.

Three Months Ended March 31,

2018 2017

(1) For the three months ended March 31, 2018, gain on sale includes a $42 gain associated w ith the sale of the Company ’s Linden, New Jersey site. For the three months ended March 31, 2017, gain on sale

includes a $12 gain associated w ith the sale of the Company ’s Edge Moor, Delaw are site and a $4 gain associated w ith the sale of the Company ’s land in Repauno, New Jersey that w as prev iously deferred

and realized upon meeting certain milestones.

(2) Includes litigation settlements, w ater treatment accruals, and other charges.

(3) Includes the remov al of certain discrete income tax impacts w ithin the Company ’s prov ision for income tax es. For the three months ended March 31, 2018 and 2017, the adjustment is primarily attributable to

w indfall benefits on the Company ’s share-based pay ments of $5 and $10, respectiv ely .

Return on Invested Capital (ROIC) (Unaudited)

17


2018 2017

Adjusted EBITDA (1) 1,605$ 979$

Less: Depreciation and amortization (1) (272) (289)

Adjusted EBIT 1,333 690

Total debt 4,155 3,552

Total equity 1,002 358

Less: Cash and cash equivalents (1,434) (898)

Invested capital, net 3,723$ 3,012$

Average invested capital (2) 3,327$ 3,257$

Return on Invested Capital 40.1% 21.2%

Three Months Ended March 31,

(1) Based on amounts for the trailing tw elv e months ended March 31, 2018 and 2017. Reconciliations of Adjusted EBITDA to net income

(loss) attributable to Chemours are prov ided on a quarterly basis. See the preceding table for the reconciliation of Adjusted EBITDA to net

income attributable to Chemours for the three months ended March 31, 2018 and 2017.

(2) Av erage inv ested capital is based on a fiv e-quarter trailing av erage of inv ested capital, net.

Free Cash Flow Reconciliations (Unaudited)

18


December 31,

2018 2017 2017

Cash flow provided by operating activities 196$ 41$ 303$

Less: Purchases of property, plant, and equipment (102) (69) (165)

Free Cash Flow 94$ (28)$ 138$

March 31,

Three months ended

GAAP Net Income Attributable to Chemours to Adjusted Net Income, Adjusted

EBITDA and Adjusted EPS Reconciliations (Unaudited)

19


Low High

Net income attributable to Chemours 985$ 1,080$

Other adjustments (45) (45)

Restructuring, asset-related, and other charges, net 35 25

Provision for income taxes relating to reconciling items (1) 5 5

Adjusted Net Income 980 1,065

Interest expense, net 220 220

Depreciation and amortization 280 280

All remaining provision for income taxes 295 285

Adjusted EBITDA 1,775$ 1,850$

Weighted-average number of common shares outstanding - basic (2) 179 179

Dilutive effects of Chemours' employee compensation plans (2,3) 6 6

Weighted-average number of common shares outstanding - diluted (2,3) 185 185

Earnings per share - basic 5.50$ 6.03$

Earnings per share - diluted (3) 5.32 5.84

Adjusted earnings per share - basic 5.47 5.95

Adjusted earnings per share - diluted (3) 5.30 5.76

(1) The income tax impacts included in this caption are determined using the applicable rates in the tax ing jurisdictions in w hich income or ex pense occurred and include both current and

deferred income tax ex pense or benefit based on the nature of the non-GAAP financial measure.

(2) The Company ’s estimates for the w eighted-av erage number of common shares outstanding - basic and diluted reflect results for the y ear ended December 31, 2017, w hich are carried

forw ard for the projection period and updated for the estimated impacts of the Company ’s 2018 share repurchase and other activ ity on a w eighted-av erage basis.

(3) Diluted earnings per share is calculated using net income av ailable to common shareholders div ided by diluted w eighted-av erage common shares outstanding during each period,

w hich includes unv ested restricted shares. Diluted earnings per share considers the impact of potentially dilutiv e securities ex cept in periods in w hich there is a loss because the inclusion

of the potential common shares w ould hav e an anti-dilutiv e effect.

The Company ’s estimates reflect its current v isibility and ex pectations of market factors, such as, but not limited to: currency mov ements, titanium diox ide prices, and end-market

demand. Actual results could differ materially from the current estimates due to market factors and unknow n or uncertain other factors, such as non-operating pension and other post-

retirement employ ee benefit activ ity w ith respect to the Company ’s foreign pension plans, including settlements or curtailments, cost sav ings actions that may be taken in the future, the

impact of currency mov ements on the Company ’s results, including ex change gains and losses, and the related tax effects, or the impact of new accounting pronouncements.

Year Ended December 31, 2018

(Estimated)

GAAP Cash Flow Provided by Operating Activities to Free Cash

Flow Reconciliations (Unaudited)

20

($ in millions unless otherwise noted) (Estimated)

Year Ended December 31,

2018

Cash flow provided by operating activities > $1,225

Less: Purchases of property, plant, and equipment (525) - (475)

Free Cash Flow > $700

first quarter earnings presentation · first quarter 2018 financial summary 4 ($ in millions unless...

Documents